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Is Live Shopping the Future?

Blending entertainment with instant purchasing, Live shopping offers retailers, brands, and digital platforms a new channel with enormous scope for creating value. If China’s experience is any guide, analysis indicates that live shopping-initiated sales could account for as much as 10 to 20 % of all e-commerce by 2026.

The arrival of Alibaba’s Taobao Live in May 2016 marked the opening of a new chapter in sales. The Chinese retail giant had pioneered a powerful new approach: linking up an online livestream broadcast with an e-commerce store to allow viewers to watch and shop at the same time. Live shopping quickly established itself as a fixture in sales campaigns and, more broadly, as a reliable digital tool for boosting customer engagement and sales. In 2020, the first 30 minutes of Alibaba’s Singles’ Day presales campaign on Taobao Live generated an impressive $7.5 billion in total transaction value.

Live shopping combines instant purchasing of a featured product and audience participation through a chat function or reaction buttons. In China, Live shopping has transformed the retail industry and established itself as a major sales channel in less than five years. In a 2020 survey, two-thirds of Chinese consumers said they had bought products via livestream in the past year. While retailers overall in the West are still behind China in the pursuit of Live shopping, early movers are also starting to rack up significant sales.

How does Live Shopping create value?

Live Shopping can help brands, retailers, and marketplaces primarily in two areas:

Accelerating conversion. Live Shopping is entertaining and immersive, keeping viewers watching longer. It also telescopes customer decision journeys from awareness to purchase. Time-limited tactics such as one-off coupons can be used to generate a sense of urgency. Companies report conversion rates approaching 30% — up to ten times higher than in conventional e-commerce.

  1. Improving brand appeal and differentiation. Done well, Live shopping increases a brand’s appeal and distinctiveness and pulls in additional web traffic. It can strengthen positioning among existing customers and attract new ones, especially young people keen on innovative shopping formats and experiences. Some companies are seeing their share of younger audiences increase by up to 20%.

A rapidly growing channel

Live shopping has evolved rapidly in China, taking less than five years to develop into an innovative sales channel with an estimated penetration of 10%. The value of China’s Live shopping market grew at a compound annual growth rate (CAGR) of more than 280% between 2017 and 2020, to reach an estimated $171 billion in 2020. This growth spurt has been intensified by the COVID-19 pandemic, and Chinese sales are expected to reach $423 billion by 2022.

China live shopping - gross merchandise value

The product categories most often showcased in Live shopping are apparel and fashion, with a 36% share, followed by beauty products and food, with roughly 7% each. Consumer electronics account for some 5%, and furnishing and home decor for almost 4%.

In terms of demographics, Generation Z and millennials dominate, although Live shopping is starting to attract middle-aged and more-senior consumers. By March 2020, Live shopping was used by 265 million people—almost 30% of Chinese Internet users. Taobao remains the world’s biggest player, with a market share of 35%.

Following China’s lead, Western brands, retailers, and marketplaces are establishing their own Live shopping ventures and events to promote their products, especially in beauty and fashion. In December 2020, Walmart piloted a livestream fashion event on TikTok that netted seven times more viewers than expected and enabled it to add 25% to its TikTok follower base.

Starting out in Live Shopping

While Live shopping is still an emerging channel with many unknowns, some best practices are emerging, and lessons from e-commerce are proving to be applicable. Brands will need a thoughtful approach to learning how to use the medium — it can be expensive to do Live shopping — and evolve their capabilities as they learn.

Which format?

To set up a livestream event, companies typically engage a key opinion leader (KOL) or key opinion consumer (KOC) to host the show, introduce the product, and interact with the audience to trigger sales. Several popular formats have emerged, each with its own strengths:

  • Interviews with a big name or influencer from a relevant segment feel more personal, authentic, and genuine than product launches and can be good for building awareness and driving traffic.
  • “Behind-the-scenes” videos offering the inside story of a product or company help build brand image and loyalty in a target segment.

Regardless of format, many successful events feature interactive elements such as games, quizzes, and giveaways to keep viewers engaged and entertained. They maintain high production values in photography, location, lighting, and sound and ensure that scripts are not overly focused on the product.

What’s next for Live Shopping?

Observations suggest we can expect to see the following developments in the next few years:

Micro- and nano-influencers. Big-name influencers and celebrities with millions of followers are expensive to hire and don’t always make the best hosts. Using influencers with a few thousand dedicated followers can generate a more intimate and trusted connection with audiences at lower cost. According to one survey, the engagement rates for nano-influencers on Instagram are ten times those for mega and macro influencers.

Expansion into new sectors. As live shopping increases its reach, industries are likely to move in. For example, a leading tech company is planning to use its livestreaming platform to provide health-related content and services such as consultations and appointment scheduling.

Innovative formats. Augmented reality (AR) and virtual reality (VR) can make the shopping experience even more immersive and enable buyers to see a product from every angle. In an early example, Ulta Beauty teamed up with AR developer Perfect Corp to include virtual try-ons in its “Beauty School” livestream. In the future, consumers may be able to have virtual face-to-face conversations with a show host just as though they were speaking in a store.


Live shopping has become table stakes for successful consumer companies in China and much of the rest of Asia and is rapidly spreading to Europe and the United States. Some pioneers have achieved extraordinary reach and impact. Others wanting to follow their example will need to move quickly to design their own experiments to get the most out of this dynamic new channel.